So here we go again. A month after George Osborne gleefully announced that growth in national income would be 1.4% in 2013, the Nationwide reports that during the same 12 months house prices have risen by 8.4% – which is precisely six times as fast. And that is merely the average. While housing remains cheap in parts of the north, and Scotland is another country entirely, in the hotspots, such as London and central Manchester, prices are soaring at twice or even thrice that average rate.

The gathering recovery has not yet restored overall output (it's still lower than seven years ago), nor has it rebalanced an economy incapable of paying its way in the world (the balance of payments deficit has swollen to 5% of GDP, an overdraft last seen in the late 1980s boom). Still less has it done anything to swell pay packets of ordinary workers, which are being eaten up by inflation that is remorselessly outpacing pay. What the nascent recovery has done, however, is rekindle the true national sport since the 1970s – property speculation. Even if it is not possible to invest, build or earn our way out of economic difficulties, millions of freeholders can once again hope to own their way out of trouble. The British dream is not dead! After the chancellor was reported to have quipped to the cabinet that he'd "get a little housing boom and everyone will be happy", the Daily Express purrs that good times have returned.

So what's not to like? Even to pose such a question in jest could offend the near 2 million families on council waiting lists. For those who never had the earning power to take up the right to buy, decent housing has, barring brief recessionary interruptions, become steadily less affordable over a third of a century. Through the 1980s, this group were contemptuously ignored as an outmoded minority, hopelessly stuck in their anachronistic status as tenants in property-owning times – a social problem perhaps, but a political irrelevance.

As a new bubble puffs up, however, these familiar victims are joined by another, more numerous group, less easily ignored – young people from middling as well as poor families, who see no prospect of getting on to the ladder before old age. Where their parents might have had to scrimp for three years to get a deposit together in the 1980s, the Resolution Foundation calculates that high house prices would mean a youngster on middling pay today having to save for something like 22 years. Halifax reports that the average first-time buyer is now into their 30s, after a collapse in home ownership rates among the under-35s to below 30% drove the historically unprecedented overall drift back towards private rental that was evident by the time of the 2011 census.

With private rents, in parts of the Midlands as well as the south, in the stratosphere, the government rightly saw that something had to be done. Sadly, the something it embarked on – Help to Buy – could not have been better designed to make the root problem worse. With no regard for who needs the help, it subsidises the scramble to take possession of a pretty fixed stock of dwellings, something guaranteed to pump prices up further.

A better alternative would be to harness some of the vast windfall delivered into the laps of the housing-haves to build dwellings for the housing have-nots. Bringing first homes into the capital gains tax net could raise vast sums to do this; ancillary measures to crack down on speculative land-hoarding would give the necessary building work a further boost. Money invested in social homes would reduce rents and also the cost of housing benefit, which – for all the brutality of the bedroom tax – remains incredibly high.

Housing, then, is a problem that can be fixed. But only by a government prepared to bulldoze the decrepid old structures of the British political economy, and start building again from the foundations, brick by brick.